Mayor John Booth said the council spent a long time considering the issue before deciding to give the properties to the society, which operates the Carter Court rest home.
"We feel there's a better way forward for that housing and for people using the housing. We've been looking at it for a couple of years and the council working group looked at all the options, but we decided that by gifting it we would retain ownership within Carterton."
The risk of amalgamation was another reason to gift the property, Mr Booth said.
"There was a risk with that wider governance that we would lose that control."
It made sense to continue the legacy of the town's founder, Charles Rooking Carter, who gifted a home for aged men, Carter Home, to the town, Mr Booth said.
It was hoped residents might now become eligible for the Government's income-related rent subsidy, which was not available to tenants of council-owned housing.
The proposed agreement between the society and the council meant there would be no increase in rent for the first year following the transfer, Mr Booth said.
"We are very conscious that money is a big thing for these people. Many of them budget down to the last penny."
Subsidised rents at the units range between $87 to $132 per week, depending on the property.
Tenants must have limited assets and a low income to qualify for the subsidised rate.
The manager of Carter Court, Chris Clarke, said the society would be making no significant changes to the entry criteria, which stipulate the prospective tenant must be receiving a government pension and be aged 65 or over, with preference given to those who cannot afford alternative accommodation. If the proposal is approved, the society would be looking to consult residents and increase their support networks within the community.
More support services would be available for those residents who needed it, he said.
"Support can be anything from access to meals, laundry services, access to recreation and social activities at Carter Court."
It was hoped the addition of the properties would cement the society's plans for future growth, including more villas on the Carter Court site.
"It grows our vision of having a range of housing options."
The council will confirm the proposal when it adopts the draft long-term plan at its next meeting, which is expected to be held sometime in the next few weeks.